On November 18, the U.S. Securities and Exchange Commission (SEC) announced its enforcement results for the 2021 fiscal year. In the announcement, the SEC highlights a number of different “key priority areas” in which it filed noteworthy enforcement actions over the course of the year. One of these areas is enforcing the Foreign Corrupt Practices Act (FCPA).
The FCPA, passed by Congress in 1977, is a U.S. anti-corruption law that prohibits the payment of anything of value to foreign government officials in order to obtain a business advantage. It also contains accounting provisions which require publicly traded corporations to make and keep books and records that accurately reflect the transactions of the corporation. In 2010, the Dodd-Frank Act, which established the SEC Whistleblower Program, added whistleblower provisions to the FCPA. Individuals can disclose information relevant to potential FCPA violations to either the SEC or the Commodity Futures Trading Commission.
The SEC’s enforcement announcement listed four separate FCPA enforcement actions filed in the 2021 fiscal year. In the introduction to the announcement, the SEC also notes that “the SEC’s whistleblower program was critical to these efforts and had a record-breaking year.”
The first FCPA action listed by the SEC is an action from October 2020 against Goldman Sachs. Goldman Sachs agreed to pay the SEC more than $1 billion to settle charges that it violated the FCPA. According to the SEC, “beginning in 2012, former senior employees of Goldman Sachs used a third-party intermediary to bribe high-ranking government officials in Malaysia and the Emirate of Abu Dhabi. The order finds that these bribes enabled Goldman Sachs to obtain lucrative business from 1MDB, a Malaysian government-owned investment fund, including underwriting approximately $6.5 billion in bond offerings.”
The second action is a January 2021 action against Deutsche Bank. Deutsche Bank allegedly made corrupt payments and bribes to third-party intermediaries and falsified records to conceal the illegal behavior. In order to resolve the charges, Deutsche Bank has agreed to pay over $130 million.
The third action involved September 2021 charges against WPP, the world’s largest advertising group. WPP agreed to a $19 million settlement to resolve charges that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA. According to the SEC, WPP failed to enforce “internal accounting controls and compliance policies” at subsidiary companies that the group acquired. This allegedly allowed subsidiary companies to use bribery as a tool to get ahead in international marketplaces.
The final FCPA action listed by the SEC was filed in October 2020 against Brazilian meat producers. The SEC charged the producers with an extensive, multi-year bribery scheme. The defendants agreed to pay nearly $27 million to settle the charges.
Through the SEC and CFTC Whistleblower Programs, qualified whistleblowers, individuals who voluntarily provide the SEC or CFTC with original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. Additionally, under the DFA’s related action provisions, when a whistleblower’s disclosure to the SEC also leads to a successful enforcement action by another agency, the whistleblower is entitled to an award of 10-30% of funds recovered in that action. For example, a whistleblower whose disclosure leads to FCPA charges by both the SEC and the DOJ could be eligible for awards based on the sanctions collected by both agencies.
The SEC’s enforcement results announcement underscores that the agency views the FCPA as an essential part of its enforcement arsenal.
SEC Announces Enforcement Results for FY 2021